Big Companies

August 11, 2008

Pick the best value stocks with our Stock Ranks, screening and valuation tool. Try the live demo today.

Most of you may have noticed that I usually write about small companies. Although I’m vested in United Health, which is the largest company I own, I don’t bother writing my own analysis on them. There are already too many analysts and individual investors writing about the company that I just don’t feel the need.

A Big Herd

The number of analysts covering UNH, MSFT, AAPL, FSLR, INTC are 14, 19, 22, 20 and 32 respectively. The greater the number of analysts, these companies are subject to greater coverage and headlines. However, with so many analysts covering the same company, I find it hard to believe that there are going to be 20-30 different views and conclusions.

Small Moves

Big companies offer some attractive opportunities if the company follows a series of misfortunes, and then as it recovers, big moves can occur, but this is the exception rather than the rule.

The reason people refer to blue chips as “stable” and “non risky” is because they don’t drop much in price. Conversely, they don’t go up much either.

The only reason I would put my money into Exxon Mobil, Microsoft, GE or Walmart without waiting for a big drop is so that I can

beat the GDP

hopefully stay above inflation

anchor my portfolio to ease my emotions in rough times (but proven lately that this isn’t always the case)

I don’t invest in large companies hoping to triple or quadruple my money.

Hard to Please The Street

Regarding GE, minus their struggling reinsurance unit of late, this is a company that has done so many things right. They expanded into virtually every business and came out on top yet for the past 8 years, the stock price has been declining. With so many shares outstanding (9.95billion), even the EPS is too diluted to get analysts and the Street excited. GE just continues to inch along at best.

Everything else being equal, you’ll do better with the smaller companies.

Disclosure

No positions in any companies mentioned

[tags]big companies, blue chips,ko,ibm[/tags]

What is Old School Value?

Old School Value is a suite of value investing tools designed to fatten your portfolio by identifying what stocks to buy and sell.

It is a stock grader, value screener, and valuation tools for the busy investor designed to help you pick stocks 4x faster.

My wife and I are Christians and our focus is to love God and love people. We are proud supporters of Compassion and are grateful to be sponsoring 8 children. We are ordinary people and understand that we cannot change the world, but we can try. Call me crazy, but our dream is to one day sponsor 1,000 children around the world. Thank you for helping us achieve this one child at a time.

Disclaimer: Old School Value LLC is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on OldSchoolValue.com represent a recommendation to buy or sell a security. The information on this site, and in its related application software, spreadsheets, blog, email and newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. In no event shall OldSchoolValue.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any product, content or other material published or available on OldSchoolValue.com, or relating to the use of, or inability to use, OldSchoolValue.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related blog, email and newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way.